TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 182

6.

(c) the ELC preferences scheme, based on duty free quotas and a 50% cut

off point, will probably not be as attractive to those other countries

as the U.S. scheme - although as time goes on they will begin to take

increasing advantage of the Community scheme

In view of all these factors, it could well happen that, if Hong Kong were

to be excluded from the G.S.P. altogether, the paradoxical situation would

arise where

7.

-

(i) the build-up of manufacturing capacity for export in especially

Taiwan, South Korea, Singapore and Mexico would, when added to Hong

Kong's existing capacity, be greater than if Hong Kong were included

in the G.S.P. and

(ii) the pressure on Hong Kong to export to the Community, whether enlarged

or not, would be greater than if she were receiving preferences all

round.

-

In such a situation, also the United Kingdom Government - and, if the U.K.

were by then in the Community, to some extent the Community as such as well

could not abdicate its responsibility for the well-being of the people of

Hong Kong. If the Colony's economic situation deteriorated, remedial steps

of one sort or another would need to be taken. But in that sort of situation

the cost and consequences of these steps would be likely to fall more heavily

on Europe than would be the case if the United States had played her part from

the outset by including Hong Kong in the G.3.P.

8. As against this, if Hong Kong were to be included as a beneficiary in the

G.S.P. by all donor countries, but above all by the United States and the EEC,

the "burden" of Hong Kong exports would be spread more evenly, with the U.S.

continuing to take the greater proportion. At the same time, the overall

burden of exports from all beneficiary countries would probably in the end be

no greater than if Hong Kɔng were excluded (because the build-up of

manufacturing capacity in competitor countries would be unlikely to be as

rapid).

9. The conclusion is, therefore, that the problem of Hong Kong for the

Community and especially the enlarged Community would be less if Hong Kong were included in the G.3.P. by all major donor countries than if she were to

be excluded. In this connection, it should be noted that the United States

/will

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